When we realize a change, a problem, or threat to a status quo we naturally try to regain balance. We panic or develop fear, and react in ways to get rid of the problem. Once we’ve achieved that, we relax and enjoy the regained balance. Until the next threat occurs and the cycle starts anew, because we forget to systemically redesign our action patterns and the way
we operate. This cycle is called a balancing loop.
Just like an entrepreneur who realized that their business is suffering: they react by creating some sort of plan, probably containing a push for more sales and a cost-cutting program. Once the business sees the results of these measures, i.e. an improved financial situation, they will maintain the new equilibrium until the pressure returns.
Early in my career, in 2008, I saw what regaining balance can look like: the leadership of one the biggest international printing businesses was trying to stop the financial bleeding and create a new direction. I was a young strategy manager at that time, supporting the management board throughout the design and implementation of a strategy.
In hindsight, what we implemented were cost-cutting and restructuring measures. It hardly deserved to be called ‘strategy’… It was a reactive, fear-based, crisis-oriented approach aiming to re-establish the good old days. Long story short: the strategy didn’t work because leadership failed to break old patterns to establish new ways of doing business. We didn’t make the leap.
Balancing loops were first described by Peter Senge, who is well-known for his work on the circles of causality. The second circle Senge describes is a growth cycle, unleashing energy: a reinforcing loop. It describes processes that reinforce in a desired direction, so-called virtuous cycles, like feeling better after exercising, and therefore exercising more, and feeling better and better over time.
For a business, a reinforcing loop could start with a purpose or vision – as opposed to a threat or problem – that stokes passion instead of fear. The subsequent action, as opposed to reaction, is future-oriented and aims to create a new normal instead of regaining balance.
Let’s apply this concept to the world of business. Business strategies should be anchored in passion and purpose, not in a problem. Yes, problems and purpose might be connected. But there is a difference in focussing on a problem only or focussing on the options that come with solving the problem.
Össur Kristínsson was born in 1943 with one leg significantly shorter than the other. He wanted to explore the Icelandic outdoors with his friends and started to build his own prosthesis. He could have stopped there. He had regained balance. Literally. Instead, Össur founded his own company, created a success story, and became the global leader in high tech prostheses to help people live without limitations.
Great strategies create value for customers, employees, and suppliers. They create a new normal. And great entrepreneurs realize that the challenges they face today can only be matched by creating purpose-based and impact-driven strategies, creating virtuous cycles.
Reach out to discover some simple tools that help you create reinforcing loops in your business.
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